A comparative analysis of immigrant skills and their utilization in Australia, Canada, and the USA

Abstract

We compare literacy test scores and their impact on wage and employment outcomes of Australian, Canadian, and the US immigrants. Overall, we find little to distinguish the skills of immigrants to these three countries, although there is some indication of gains at the lower end of the distribution among Australian immigrants arriving after the mid-1990s. Relative immigrant wage returns to literacy are, however, substantially higher in the USA, which we argue reflects language-skill complementarities, as opposed to more efficient skill utilization or unobserved productivity characteristics.

JEL Classifications

Notes

Acknowledgments

This paper was completed while Andrew Clarke was a visiting scholar in the Office of Population Research, Princeton University. Their hospitality, and in particular the generous hospitality of Marta Tienda, is gratefully acknowledged. Mikal Skuterud acknowledges financial support from the Social Science and Humanities Research Council of Canada (No. 410-2011-0281). We thank the Editor of this journal and two anonymous referees for their numerous helpful comments.

Appendix

Table 6

Probit employment regression conditional on document literacy level

Australia

Canada

USA

coeff.

Jackknife

p

coeff.

Jackknife

p

coeff.

Jackknife

p

Std. Err

Std. Err

Std. Err

All immigrants

Literacy

0.069

(0.005)

0.000

0.065

(0.006)

0.000

0.070

(0.008)

0.000

Literacy*Immigrant

−0.008

(0.010)

0.424

−0.035

(0.013)

0.007

−0.035

(0.016)

0.035

Immigrant

0.140

(0.062)

0.025

−0.071

(0.059)

0.231

−0.028

(0.116)

0.811

Intercept

1.324

(0.091)

0.000

1.365

(0.083)

0.000

1.258

(0.125)

0.000

Recent immigrants

Literacy

0.068

(0.005)

0.000

0.064

(0.006)

0.000

0.070

(0.008)

0.000

Literacy*Recent

−0.012

(0.016)

0.461

−0.038

(0.015)

0.010

−0.060

(0.024)

0.014

Literacy*Not recent

−0.004

(0.013)

0.750

−0.027

(0.016)

0.082

−0.003

(0.020)

0.870

Recent immigrants

0.070

(0.102)

0.492

−0.409

(0.094)

0.000

−0.203

(0.164)

0.216

Not recent immigrants

0.178

(0.073)

0.015

0.195

(0.086)

0.024

0.259

(0.162)

0.111

Intercept

1.330

(0.092)

0.000

1.412

(0.082)

0.000

1.281

(0.124)

0.000

Recent immigrants with Foreign mother tongue

Literacy

0.068

(0.005)

0.000

0.064

(0.006)

0.000

0.070

(0.008)

0.000

Literacy*Recent NESB

−0.013

(0.019)

0.492

−0.021

(0.019)

0.277

...

...

...

Literacy*Recent Spanish

...

...

...

...

...

...

−0.125

(0.051)

0.015

Literacy*Recent other

...

...

...

...

...

...

−0.099

(0.035)

0.005

Literacy*Not recent NESB

−0.009

(0.017)

0.576

−0.046

(0.013)

0.001

...

...

...

Literacy*Not recent Spanish

...

...

...

...

...

...

−0.040

(0.031)

0.194

Literacy*Not recent other

...

...

...

...

...

...

−0.013

(0.046)

0.770

Recent NESB

0.006

(0.116)

0.962

−0.381

(0.101)

0.000

...

...

...

Recent Spanish

...

...

...

...

...

...

−0.680

(0.272)

0.012

Recent other

...

...

...

...

...

...

0.183

(0.316)

0.563

Not recent NESB

0.066

(0.101)

0.515

0.208

(0.074)

0.005

...

...

...

Not recent Spanish

...

...

...

...

...

...

0.003

(0.204)

0.987

Not recent other

...

...

...

...

...

...

0.333

(0.185)

0.072

Intercept

1.350

(0.092)

0.000

1.414

(0.084)

0.000

1.305

(0.121)

0.000

Dependent variable is a dummy variable indicating whether an individual worked at any time in the past year. Reported coefficients \(\bar {b}\) are unweighted averages of five probit estimates \(\bar {b}_{j}\), each using one of the five plausible values of literacy and the population weights. Standard errors are estimated using \(\text {Var}(\bar {b})=J^{-1}{\sum }_{j} \text {Var}(\bar {b}_{j})+(J+1)(J(J-1))^{-1}{\sum }_{j}(\bar {b}_{j}-\bar {b})\), where \(\text {Var}(\bar {b}_{j})\) is estimated using the provided jackknife replicate weights and J = 5 represents the number of plausible values. Literacy is adjusted by subtracting 225 and dividing by 10. Regressions include a quadratic in age, controls for geographical region of residence, urban/rural area of residence, and an indicator for gender. The samples are restricted to individuals aged 18–64 who were employed in the previous 12 months. The immigrant sample is restricted to individuals who arrived in their destination country at age 14 or higher after 1955. For Australia and the USA, individuals are characterised as having a foreign mother tongue if English was not their first language learned and understood. For Canada, a foreign mother tongue is defined for first languages other than English or French. Recent immigrants refer to foreign-born individuals that have less than ten years of residene in the destination country

Dependent variable is a dummy variable indicating whether an individual’s current work status is employed. Reported coefficients \(\bar {b}\) are unweighted averages of five probit estimates \(\bar {b}_{j}\), each using one of the five plausible values of literacy and the population weights. Standard errors are estimated using \(\text {Var}(\bar {b})=J^{-1}{\sum }_{j} \text {Var}(\bar {b}_{j})+(J+1)(J(J-1))^{-1}{\sum }_{j}(\bar {b}_{j}-\bar {b})\), where \(\text {Var}(\bar {b}_{j})\) is estimated using the provided jackknife replicate weights and J = 5 represents the number of plausible values. Literacy is adjusted by subtracting 225 and dividing by 10. Regressions include a quadratic in age, controls for geographical region of residence, urban/rural area of residence, and an indicator for gender. The samples are restricted to individuals aged 18–64 who were employed in the previous 12 months. The immigrant sample is restricted to individuals who arrived in their destination country at age 14 or higher after 1955. For Australia and the USA, individuals are characterised as having a foreign mother tongue if English was not their first language learned and understood. For Canada, a foreign mother tongue is defined for first languages other than English or French. Recent immigrants refer to foreign-born individuals that have less than ten years of residence in the destination country

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